Lack of Mobile Optimization Could Cost Small Online Merchants

With smart-phone usage on the rise, small online merchants are at risk of losing market share because most of them haven’t created e-commerce sites that work smoothly on mobile devices. At the same time, independent sales organizations could lose business if they don’t find ways to help small clients deal with customers using mobile phones. That’s according to a report released on Wednesday that measures small merchants’ readiness to accept mobile transactions.

More than half of e-commerce and multichannel merchants surveyed for the report (55%) indicated their Web sites are not optimized for mobile transactions, which means pages are slow to load and checkout forms are hard to see and fill out. Consumers viewing such sites on a mobile screen must do a lot of pinching and zooming to read or see anything. Even worse, some 70% of these merchants are not tracking mobile transactions as distinct from sales from PCs. These merchants as a result have no notion of such factors as cart abandonment by mobile users.

“It’s a little shocking that a merchant relying on e-commerce as a lifeline is not looking at these trends,” says Dave Abouchar, senior director of product management at ControlScan Inc., an Alpharetta, Ga.-based security-technology vendor that conducted the research with TransFirst, a Hauppauge, New York-based merchant processor.

In June and July, the two companies canvassed more than 17,000 Level 4 merchants, those doing up to 20,000 e-commerce Visa transactions or 1 million brick-and-mortar Visa transactions each year. The research garnered responses from 736 merchants. Some 27% of the respondents were either e-commerce-only or multichannel merchants.

The lack of attention to mobile trends online is “the alarming [result] that needs immediate attention,” notes Craig Tieken, director of product at TransFirst. “One day, these guys will look at their numbers and say, ‘I’ve been flat in my sales.’ It’ll sneak up on them.” There’s also a search penalty for e-commerce sites that don’t optimize for mobile devices, Tieken adds. Some search engines, like Google, relegate results from non-optimized sites to the lower rungs of searches. Without a site designed for mobile access, “chances are, I’m not even going to get looked at,” he says.

Mobile access to the Internet is fast entering the mainstream. Some 45% of U.S. adults now own a smart phone, which links to the Web more easily than a feature phone, while 17% of mobile users access the Web mostly on their phone, according to research from the Pew Internet and American Life Project. Meanwhile, some 19% of U.S. adults now own a tablet computer, Pew says. These days, consumers, especially those under 35, are “umbilically connected to their phone,” notes Tieken.

Yet, the top reasons merchants gave for not optimizing are “customers are not asking for the service” (35%) and “no compelling reason to make the investment” (26%). But by not tracking abandonment, these merchants have ignored a valuable source of customer feedback. “We have to educate merchants on that,” says Tieken.

Indeed, the task of education and preparation falls to ISOs and other acquirers, say Abouchar and Tieken. “We have to deliver this information to the ISOs because it helps ISOs educate merchants,” says Tieken. This will require a new approach by ISOs to their clients, he argues, one that substitutes online-selling advice for “things that aren’t all that productive,” such as conversations about rate compression and pennies-off rate discounts.

The consequences could be serious for ISOs that ignore the problem. “If you don’t take this message to the market, somebody else will, and those that do will win out,” says Tieken.

In other results from the survey, 10% of physical and multichannel merchants (83% of respondents) are using mobile acceptance with either a smart phone or a tablet. Of these, some 35% said the mobile system supplanted a traditional point-of-sale device. The iPhone/Square combination is the most popular, with 57% using an iPhone and 45% opting for the Square Inc. reader. Next in popularity are the GoPayment device from Intuit Inc. (18%) and the VeriFone Systems Inc. Sail technology (14%).

As for mobile wallets, only 3% of the respondents currently accept payments from a product such as Google Wallet or PayPal, but 33% indicate they are in implementation or have plans to start over the next two years.